Peugeot chief renounces $29 million pension deal after outcry

The outgoing chief executive of French carmaker PSA Peugeot Citroen said he would forego his pension package after an outcry from government ministers and labour unions.

Peugeot has set aside 21 million euros($28.5 million) for Philippe Varin's pension deal. The company is cutting more than 10,000 jobs as it struggles to recover from a six-year European market slump.

"Given the immense respect I have for our staff and the consequences of the difficult but necessary decisions I had to take, I have decided to relinquish the present provisions of my pension package," Varin told a news conference on Wednesday.

Varin acknowledged the "polemic and emotion" caused by his pension said the company's supervisory board would decide on the new terms of his departure after consulting a corporate governance advisory body in the French employers' organisation.

The ministers and unions bristled at the fact that Varin, who will be stepping down three years before the end of his contract, would receive an annual 310,000 euro ($420,000) pension net of tax and social charges.

Peugeot announced this week that Varin would be replaced next year by former Renault No. 2 Carlos Tavares in a move that may help it secure new funding from Chinese partner Dongfeng.

Peugeot and Dongfeng are in talks to build on their existing Chinese joint venture with cooperation in other markets and a multi-billion-euro share issue that could see Dongfeng and France's government acquire stakes in the French carmaker, sources familiar with the matter have said.

The French government told Peugeot earlier on Wednesday to review the "inappropriate" pension award for Varin.

"Given PSA's difficulties and given that the state has already underwritten (finance arm) Banque PSA Finance to the tune of 7 billion euros, we have asked for some very thorough explanations from PSA on the financial arrangements of his retirement," Industry Minister Arnaud Montebourg said as he left a cabinet meeting.

In keeping with company practice, Varin will receive no severance payment when he leaves the group, unlike most of his counterparts at other major French companies.